Kiwifruit Grown in California; Proposed Relaxation of Container Marking Requirements

SUMMARY: This proposed rule would relax the container marking

requirements for kiwifruit packed under the Federal marketing order for

kiwifruit grown in California. This relaxation would reduce the number

of kiwifruit containers required to be marked with the lot stamp

number. This rule would reduce handling costs and provide more

flexibility in kiwifruit packing operations.

DATES: Comments must be received by March 4, 1996.

ADDRESSES: Interested persons are invited to submit written comments

concerning this rule. Comments must be submitted in triplicate to the

Docket Clerk, Fruit and Vegetable Division, AMS, USDA, P.O. Box 96456,

room 2523-S, Washington, DC 20090-6456, or by facsimile at (202) 720-

5698. Comments should reference this docket number and the date and

page number of this issue of the Federal Register and will be made

available for public inspection in the Office of the Docket Clerk

during regular business hours.

FOR FURTHER INFORMATION CONTACT: Rose Aguayo, California Marketing

Field Office, Marketing Order Administration Branch, Fruit and

Vegetable Division, AMS, USDA, 2202 Monterey Street, suite 102B,

Fresno, California 93721; telephone (209) 487-5901, Fax # (209) 487-

5906; or Charles Rush, Marketing Order Administration Branch, Fruit and

Vegetable Division, AMS, USDA, P.O. Box 96456, room 2526-S, Washington,

DC 20090-6456, telephone (202) 720-5127, Fax # (202) 720-5698.

SUPPLEMENTARY INFORMATION: This proposed rule is issued under Marketing

Order No. 920 (7 CFR Part 920), as amended, regulating the handling of

kiwifruit grown in California, hereinafter referred to as the

``order.'' The order is effective under the Agricultural Marketing

Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter

referred to as the ``Act.''

The Department of Agriculture (Department) is issuing this proposed

rule in conformance with Executive Order 12866.

This proposed rule has been reviewed under Executive Order 12778,

Civil Justice Reform. This rule is not intended to have retroactive

effect. This proposed rule will not preempt any State or local laws,

regulations, or policies, unless they present an irreconcilable

conflict with this rule.

The Act provides that administrative proceedings must be exhausted

before parties may file suit in court. Under section 608c(15)(A) of the

Act, any handler subject to an order may file with the Secretary a

petition stating that the order, any provision of the order, or any

obligation imposed in connection with the order is not in accordance

with law and request a modification of the order or to be exempted

therefrom. A handler is afforded the opportunity for a hearing on the

petition. After the hearing the Secretary would rule on the petition.

The Act provides that the district court of the United States in any

district in which the handler is an inhabitant, or has his or her

principal place of business, has jurisdiction in equity to review the

Secretary's ruling on the petition, provided a bill in equity is filed

not later than 20 days after date of the entry of the ruling.

Pursuant to requirements set forth in the Regulatory Flexibility

Act (RFA), the Administrator of the Agricultural Marketing Service

(AMS) has considered the economic impact of this rule on small

entities.

The purpose of the RFA is to fit regulatory actions to the scale of

business subject to such actions in order that small businesses will

not be unduly or disproportionately burdened. Marketing orders issued

pursuant to the Act, and rules issued thereunder, are unique in that

they are brought about through group action of essentially small

entities acting on their own behalf. Thus, both statutes have small

entity orientation and compatibility.

There are approximately 65 handlers of California kiwifruit subject

to regulation under the order and approximately 500 kiwifruit producers

in the production area. Small agricultural service firms are defined by

the Small Business Administration (13 CFR 121.601) as those whose

annual receipts are less than $5,000,000, and small agricultural

producers have been defined as those having annual receipts of less

than $500,000. A majority of handlers and producers of California

kiwifruit may be classified as small entities.

Under the terms of the marketing order, fresh market shipments of

California kiwifruit are required to be inspected and are subject to

grade, size, maturity, pack and container requirements. Current

requirements include specifications that all containers of kiwifruit

shall be plainly marked with the lot stamp number corresponding to the

lot inspection conducted by an authorized inspector, except for

individual consumer packages and containers that are being directly

loaded into a vehicle for export shipment under the supervision of the

Federal or Federal-State Inspection Service.

The Kiwifruit Administrative Committee (committee), the agency

responsible for local administration of the marketing order, met on

November 30, 1995, and recommended, by unanimous vote, to relax the

container marking requirements by reducing the number of containers

plainly marked with the lot stamp number from all containers to all

exposed or outside containers of kiwifruit, but not less than 75

percent of the total containers on a pallet.

The marketing order authorizes under Sec. 920.52(a)(3) the

establishment of container marking requirements. Section 920.303(d) of

the rules and regulations outlines the lot stamp number container

marking requirements for fresh kiwifruit packed under the order.

The committee recommended relaxing the lot stamp number marking

requirement because of changes in the produce retail industry. The

committee anticipates that the current order language, which requires

all containers

[[Page 3605]]

to be plainly marked with the lot stamp number, would create a problem

in the near future due to industry changes in container packaging

configurations and pallet sizes. This relaxation would allow the

industry flexibility for future pallet size and container

configurations.

Many products, outside the produce industry, are received by

retailers on 48- by 40-inch pallets. The kiwifruit industry almost

exclusively used the ``LA Lug'' container which fits on the 35- x 42-

inch or 53- by 42-inch pallets until recent years. The ``LA Lug''

configuration does not create a center tier when stacked on these

pallets. When kiwifruit shippers use 35- by 42-inch or 53- by 42-inch

pallets, receivers must unload the pallets and restack the fruit on

metric pallets, causing more damage to the fruit and more labor costs

to the receiver. Because of retail buying patterns and the retail

demand for operational consistency in pallet usage, the produce

industry has been moving away from using the 35- by 42-inch or 53 x

42 inch pallets and has been moving towards using a standard grocery-

industry metric pallet measuring 48- by 40-inches. The committee

anticipates that the retail usage of the metric pallet will continue to

increase because: (1) Retailer and handler trucking and transportation

costs for produce stacked on metric pallets are less than for produce

stacked on 35- by 42-inch and 53- by 42-inch pallets, (2) retailer

labor and disposal costs are less when metric pallets are utilized, and

(3) receiving areas are steadily being remodeled to handle metric

pallets. In the 1995/1996 season, approximately one percent of the

industry's 9.3 million trays equivalents were packed in ``shoe'' box

containers. The ``shoe'' box container (12 x 20 inches) is one of two

new containers which is stacked in eight columns on a 48- by 40-inches

metric pallet, and is configured in a manner which leaves one side of

each container exposed. The other container that fits on the metric

pallet is the ``mum'' box container. The ``mum'' box container (13.3

x 16 inches) is stacked nine columns on a pallet with the center

column inaccessible to lot stamp numbering after the containers are

placed on the pallet during block inspection. In block inspection, the

inspection occurs after the pallets have been packed, strapped, and

been placed in storage. In-line inspection is performed during the

packing process, prior to palletization and storage.

The industry's usage of block and in-line inspection methods is

fairly evenly split with approximately 50 percent of the handlers using

in-line inspection and 50 percent using block inspection. The majority

of block inspections are conducted in the northern part of California

while in-line inspections are conducted primarily in the southern part

of California.

The committee's recommendation to relax the container marking

requirement would not significantly lower the number of containers

being inspected or bearing the lot stamp number. Of the 81 containers

stacked on a metric pallet during block inspection, nine containers

(the center tier--approximately 11 percent of the pallet) would not be

lot stamp numbered. The center tiers of all pallets would be randomly

inspected by the Federal or Federal-State Inspection Service for all

marketing order requirements. When the industry utilizes in-line

inspection, both the ``shoe'' and ``mum'' containers are accessible to

lot stamp number marking and inspection, as they are being stacked on

the pallet.

There is unanimous support in the industry to reduce the lot stamp

number container marking requirement.

Several other alternatives were suggested during the public

meeting. One alternative discussed by the committee was to require all

containers to continue to be lot stamp numbered. Maintaining the

requirement for lot stamp numbers to be placed on all containers would

increase handler labor costs, slow handler operations, increase handler

restrapping costs, as well as increase inspection costs. It was the

consensus of the committee that such a requirement would be cost

prohibitive as each block-inspected pallet would have to be manually

pulled apart to enable the lot stamp number to be placed on the nine-

column center tier containers.

Another alternative suggested was to eliminate the block-inspection

method and require all handlers to use the in-line inspection method.

During in-line inspection, containers would be stamped with the lot

stamp number prior to being stacked on the pallet. This would have a

serious financial impact on the industry, especially among small

growers and handlers, due to a large increase in inspection costs. This

suggestion was unacceptable to the industry as it would be cost

prohibitive and could force small growers and handlers out of business.

Another alternative examined was to establish regulations

prohibiting the use of any containers that would create an inaccessible

center when stacked on pallets. This alternative was not acceptable as

it would not allow the industry to make necessary container changes to

meet changing retailer needs and would be an excessive restriction.

This proposed rule, which would relax the lot stamp number

requirement, would impact all handlers in the same manner and was

viewed by the committee as the least restrictive and best solution.

Relaxing the lot stamp number requirement would solve the problems

caused by changes in pallet sizes and container configurations as well

as spare the industry future financial hardship. It would allow the

industry flexibility for future pallet size and container

configurations.

Based on the above, the Administrator of the AMS has determined

that this action would not have a significant economic impact on a

substantial number of small entities.

A 30-day comment period is provided to allow interested persons to

respond to this proposal. All written comments timely received will be

considered before a final determination is made on this matter.

List of Subjects in 7 CFR Part 920

Kiwifruit, Marketing agreements.

For the reasons set forth in the preamble, it is proposed that 7

CFR Part 920 be amended as follows:

PART 920--KIWIFRUIT GROWN IN CALIFORNIA

1. The authority citation for 7 CFR Part 920 continues to read as

follows:

Authority: 7 U.S.C. 601-674.

2. In Sec. 920.303, paragraph (d) is revised to read as follows:

Sec. 920.303 Container marking regulations.

* * * * *

(d) All exposed or outside containers of kiwifruit, but not less

than 75 percent of the total containers on a pallet, shall be plainly

marked with the lot stamp number corresponding to the lot inspection

conducted by an authorized inspector; except for individual consumer

packages and containers that are being directly loaded into a vehicle

for export shipment under the supervision of the Federal or Federal-

State Inspection Service.

* * * * *

Dated: January 24, 1996.

Sharon Bomer Lauritsen,

Deputy Director, Fruit and Vegetable Division.

[FR Doc. 96-2064 Filed 1-31-96; 8:45 am]

BILLING CODE 3410-02-P